The Hong-Kong based fund manager is one of Ranger’s largest shareholders.
LIM Advisors, which holds 9.2 per cent of Ranger Direct Lending’s shares, has added to calls for the investment trust to be wound-up, publishing an open letter yesterday.
Addressing both Ordinary and ZDP shareholders, LIM called the fund’s investment manager’s plan to appoint Ares as a new manager misguided. It has also called for two new board members and the sacking of the fund’s chairman.
LIM Advisors said a wind-up may take up to two years but that the existing manager is best placed to run-off the assets.
The letter said: “…we believe that 1) Ranger should be wound up as it has no viable future, 2) the board of directors of Ranger needs to be refreshed and strengthened, and 3) the current Ranger chairman should be removed as a director and two new non-executive directors with relevant experience should be appointed. We have therefore requisitioned the proposal of three separate ordinary resolutions to effect our proposals to amend the constitution of the Board at Ranger’s AGM, which is to be held on 19th June 2019.”
LIM proposed the appointment of Brendan Hawthorne and Eric Long as new directors.
Hawthorne is a specialist in financial investigations and asset recovery. Long is currently President of the Boulder [Colorado] market for First Western Trust Bank. He has formerly worked at a number of US banks, namely Silicon Valley Bank, BBVA, Compass Bank, Comerica Bank, Bank One, Colorado National Bank and Bank of America. He is the brother of George Long, who is the Chairman and founder of LIM, but LIM says he is not involved in relation to its investment in Ranger.
LIM is also calling for the removal of Ranger’s chairman: “We believe it is time for the current chairman of Ranger, Christopher Waldron, to leave the board of Ranger. He has been chairman of Ranger since its inception and listing, and therefore has presided over the traumatic losses caused by Ranger’s investment in Princeton. In addition, and more recently, as chairman he has coordinated what we believe to be a very inadequate and biased strategic review process that failed to seriously consider a winding up of Ranger.”
LIM’s letter also seeks to address the complication presented by the ZDP shares, says Numis’ analysts, previously not mentioned by Oaktree – another activist shareholder that has published several open letters calling for a portfolio wind-up.
“The early repayment of these could have a significant impact on returns of ordinary shareholders. Ranger has 53m ZDPs outstanding (£60m assets), which have a final capital entitlement of 127.63p in July 2021, equivalent to £67.6m ($91.8m),” Numis said.
If Ranger is wound-up prior to the repayment date then the ZDP Shares will only be entitled to receive their accrued entitlement to the date of winding up, Numis says.
“We understand that ZDP shareholders have to vote to approve any wind-up/reduction in capital. As a result, ZDP holders may not be willing to support a vote, unless they are offered more favourable terms. The ZDPs were issued at GRYs of 5 per cent and 4.52 per cent. The difference between the current assets of the ZDPs and their final entitlement is equivalent to c.4.9 per cent of Ordinary share net assets,” Numis added.
You can read the full letter here.